New Gekkos Riding the Merger Wave

Latter-day Gordon Gekkos are making the most of this year's merger frenzy.

Global M&A volume has surged. Monday's Alcoa(AA Quote)-Alcan(AL Quote) bid put announced worldwide merger volume over $2 trillion for 2007, according to Dealogic -- marking the earliest date that figure has been breached.

Wall Street records aren't all that's being broken, though. Regulators have been cracking down on alleged abuses of securities laws tied to the wheeling and dealing.

A string of recent cases suggests that Gekko -- the fictional trader played by Michael Douglas in the 1987 movie Wall Street -- is far from the last investor to pull a fast one using inside information.

On Tuesday, the Securities and Exchange Commission sued a Hong Kong couple over suspiciously timed stock purchases in Dow Jones(DJ Quote). The feds say the couple made $8 million by buying 415,000 shares of the publisher in the weeks ahead of News Corp.'s(NWS Quote) $5 billion bid, which was announced May 1.

Last week, the SEC charged a Credit Suisse(CS Quote) investment banker with leaking information on deals including the $32 billion leveraged buyout of TXU.

The SEC also alleges that investors made $5.3 million by buying call options on TXU just days ahead of the March announcement of its buyout by Kohlberg Kravis Roberts, Texas Pacific and Goldman Sachs(GS Quote).

Other deals the SEC is probing include the $1.8 billion buyout of Petco (PETC Quote) by two private equity firms and Adidas' purchase of Reebok, published reports say.

Observers aren't surprised.

"The increasing number of deals creates a larger number of opportunities where people might be able to misuse information," says Geoffrey Ritts, an expert in securities litigation at the law firm Jones Day.

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